Report 8 Summary

Distribution of Household Incomes in Metropolitan Vancouver: Estimates and Projections, September 2016 

This technical report documents the preparation of estimates and projections of the distribution of household incomes in Metropolitan Vancouver by age of household maintainer (to reflect life cycle purchasing patterns), household income (to reflect purchasing ability), and tenure (to reflect accommodation specific purchases) for the period 2010 to 2021. In the spirit of the scientific method, data sources are provided and assumptions made in the use of the data are stated so that readers can replicate the results presented in the report or develop their own. 

The estimates for the 2010 to 2014 period indicate that:

- the total dollar household income in the Vancouver CMA increased by 17 percent ($13.3 billion), the result of a 7 percent increase in the number of households and a 9 percent increase in average household income (from $84,540 to $92,400);

- the number of households with incomes under $100,000 increased slightly from 644,000 to 647,000, the result of a 3 percent decline in the number of households within incomes less than $50,000 and a 5 percent increase in the number with incomes in the $50,000 to $99,999 range; and 

- the number of households with incomes of $150,000 or more increased by 35 percent (from 108,600 to 148,300).

The results of the projections for 2014 to 2021 period indicate that:

- the total dollar household income in the Vancouver CMA will increase by 36 percent ($32.3 billion), the result of a 14 percent increase in the number of households and a 19 percent increase in average household income (from $92,400 in 2014 to $110,050;

- the number of households with incomes under $100,000 will decline slightly from 647,000 to 644,000, the result of a 6 percent decline in the number of households within incomes less than $50,000 and a 7 percent increase in the number with incomes in the $50,000 to $99,999 range; and

- the number of households with incomes of $150,000 or more will increase by 66 percent (from 148,280 to 245,810).

The report provides tables of annual estimated and projected number of households by $10,000 annual income groups to $100,000; $50,000 annual income groups to $250,000 and a $500,000 plus income group by 5 year age groups from under 25 to 75 plus years of age for owner-occupied and tenant households. 

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Report 7 Summary

Team Players and Federal Electoral Reform, August 2016

There is currently a parliamentary committee meeting to chart the way forward for electoral reform in Parliament, and specifically with respect to representation in the House of Commons. The reason for the consideration of reform is that Parties’ shares of voting power (representatives) does not correspond to the shares of votes that Parties received in the Election (vote proportionality) nor to the relative number of people living in each riding (population proportionality). Proportional representation is an important aspect of democratic governance, as it moves towards a situation where every vote everywhere counts equally – a state of electoral equality.

This paper describes an alternative way of selecting representative that will to keep the process of voting in ridings for national elections exactly as it is now, but change how the results of riding voting are used to populate seats in the House of Commons. Rather than directly select people to sit in the House on the basis of first-past-the-post election in each riding, the results from all the ridings in the country are used to a) select the parties who will have representatives in the House, b) determine the number of representatives each party will have in the House, and c) rank the potential representatives from each party for selection to the Party’s Parliamentary team. 

This system, the Party Election and Team Selection (PEATS) process, will precisely fulfill the goals of vote-proportional representation and of every vote everywhere counting. In 2015, the national vote results dictated that five parties had a sufficient number of votes to earn at least one seat in a 338 seat House: the PEATS process achieves this result. The national vote indicated that the Green Party would have 3.5 percent of the representation in the House (12 seats), the Bloc Quebecois Party would have 4.7 percent of the representation (16 seats), the New Democratic Party would have 19.9 percent (67 seats), the Conservative Party would have 32.2 percent (109 seats) and the Liberal Party would have 39.8 percent (134 seats) of the representation: the PEATS process achieves this result. The vote provided a ranking of the ridings in terms of relative strength to contribute to each party’s team in the House of Commons: the PEATS process reflects these results. It precisely meets the voters’ intentions without changing how Canadians vote by changing how the results of their voting are used.

In the PEATS concept very vote counts, and every party in every riding would be deeply engaged in getting every voter out, even if it knew that it was not going to win on a first-past-the-post competition in that riding, because every vote would help their team qualify for a seat in the House of Commons and to determine the Party’s team strength in Parliament. This would provide not only a reason for people to vote, but also a reason for people to consider elections in a truly national perspective. Thus this approach not only achieves vote proportionality, it would enhances voter turnout, and engages everyone in the reality of a truly national election. 

While the proposed electoral reform would achieve vote proportionality, the Constitution precludes the achievement of population proportionality: every vote everywhere can count, but they cannot count equally without Constitutional change.

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Report 6 Summary

City of Vancouver, General Manager, Community Services’ Administrative Report, Policy & Regulatory Steps for Reducing Empty Housing, July 2016

The CoV has determined that there is a social crisis, specifically a housing crisis, in the City of Vancouver. To the extent that this is the case, all of society should deal with it - we should all contribute to finding and implementing a solution.  The CoV, however, intends to pursue a course of action where only one small group, the owners of “residential property used for purposes other than continuous residential occupancy” will bear the burden of implementing social policy. Clearly opportunistic, such a policy would naturally have support from those not targeted by the tax, those who are being told that they can get something for nothing, who are being told that the solution lies in taxing someone else to pay for what we want, but most certainly not taxing us. 

This effective appropriation of private property in an attempt to implement social policy is neither equitable nor ethical, particularly so since no one has ever been told that society expects property to be occupied. Until every purchaser, prior to closing on a purchase, receives a disclosure statement, until every property owner receives notice prior to paying regular property taxes, that tells them that society requires that the property be occupied, it is just a con game.

Not only has the CoV not told people what is expected of them with respect to occupancy, even though it has had abundant opportunity to do so, it does not even know what it expects, as it has no consistent specific legal definition of “continuous residential occupancy”. Further, it has not shown that it can legally do something indirectly, to effectively discriminate on the basis of occupancy, which it cannot do directly. It also has not demonstrated that it has the power to unilaterally designate a property as a business. It has not provided any measure of the magnitude of the costs involved, nor of the timing and nature of the possible impacts.

The CoV has not done enough research, nor provided sufficient evidence, for it to either issue an ultimation demanding support from the Provincial Government by August 1st or to pursue taxation on its own. 

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Report 5 Summary

Demand and Occupancy: Micro-Economics and Metropolitan Vancouver's Housing Market, June 2016

Recently there has been much critical comment about the ownership of residential real estate in Metropolitan Vancouver for uses other than full time occupancy as a principal residence (socially unacceptable uses), which are seen as taking housing away from and/or pushing up housing prices for residents.

No one has yet articulated a comprehensive and specific definition of socially unacceptable uses that can be used for regulation. No one knows the extent to which units are used for socially unacceptable uses, the period of time they are used for these purposes, or who owns the units. Governments are being asked to, and are proposing to, regulate an activity that has not yet defined in an enforceable (i.e., legal) manner.

Presuming definitions of socially acceptable and unacceptable use of residential property, to the extent that supply can adjust to demand for these uses, in the long run residents face neither higher prices nor loss of housing due to demand for purposes other than full time principal residences. Conversely, banning these uses after supply has responded to them will provide a one time only larger supply and lower prices than otherwise would have prevailed. This stems from the fact that the appropriated units that result from retroactive regulation result in a larger supply than that dictated by resident demand. In areas where supply cannot adjust to changes in demand, the effects of both the existence of, and banning of, these other uses will be purely on prices.

The degree to which prices and supply might be affected by demand for uses other than full time occupancy as a principal residence, and by the regulation thereof, is dependant upon the extent of this demand. At this point, that is all that can be said, as the neither their definition nor their magnitude is known.

The supposed benefits of greater supply and reduced prices as a result of such regulation has been touted by proponents – but they have been remarkably silent on the associated costs. There will be external costs which will be borne by a) persons owning subject property at the time the regulation is introduced, b) all property owners to the extent that property prices fall as a result of regulation, and c) persons owning property not subject to regulation to the extent that the tax base shifts from regulated property. There will also be internal costs, including the costs of identifying subject properties, administering the regulation and dealing with appeals.

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Report 4 Summary

Coming and Going: Intra-provincial, Inter-provincial and International Migration to and from Metropolitan Vancouver, May 2016

Are Millennials being forced from Metropolitan Vancouver by its recent high housing prices? Some might be, but in aggregate they are not. The number of Millennials is increasing as a result of migration, not declining, for reasons that have most likely have little to do with housing.

More people aged 25 to 34 moved to the region last year than left it, with a net increase of 904 people if changes in non-permanent and temporarily abroad residents are included, and by 7,544 if only permanent residents are considered.

Inter-provincially, more 25 to 34 year olds are coming to the region from other provinces than are leaving for them (356 net increase in 2014/15), and we can anticipate this increasing again in the 2015/16 data given the relative economic conditions in Alberta and data at the provincial level for the second half of 2015.

Intra-provincially, the metropolitan area experienced a net loss to the rest of the province of 846 people in the 25 to 34 age group in 2014/15, not a significant number compared to the 373,746 population of the age group living in the region, but nonetheless a loss. The data do not provide an explanation of why this loss occurred, but it reflects a situation that has prevailed for 15 years, and is correlated with relatively high earlier net-in migration of 15 to 24 years olds, leading, perhaps, to a commensurate out-migration in subsequent years.

Every year since 2003/04 the region has lost population in this age group (and in every other age group except the 15 to 24 age group) to the rest of the province (with a disproportionate share attributable to net-out migration to communities in Abbotsford and Mission). Overall, the region has experienced a modestly increasing net loss to the rest of the province every year in the past two decades. This is largely the result of declining in-migration from the rest of the province, with out-migration to it remaining relatively constant.

Internationally, the 25 to 34 age group is growing, modestly adding 904 people if the increase in the number of people temporarily away and the loss of non-permanent residents in this age group is considered. If only the permanent resident population is considered, then net international migration added 7,544 permanent residents to the population in this age group.

Accounting for the 166 deaths of people in this age group, the 25 to 34 age grew by 738 people in 2014/15, a .2 percent increase; if only the permanent population is considered, the age group increased by 7,378 people.

Overall, in this region in the recent past, there has been an increase, not a loss, of people in every age groups, something we may anticipate continuing with the growth of net-in inter-provincial migration to the region as Alberta faces a few years of economic challenges.  And while much is made of the role of migration on the region’s population, attention justified perhaps by the fact that immigration, the largest inflow added 26,886 people to the region in 2014/15, we should not loose sight of the fact that the second largest inflow was births, which added 23,435 people to the region’s population.

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Report 3 Summary

Land Supply: Scarce means Dense and Expensive, April 2016

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The metropolitan Vancouver region, which now extends beyond the boundaries of the Greater Vancouver Regional District (GVRD), has the smallest supply of land for urban uses of all of Canada’s major metropolitan regions. The two regional districts that share this one metropolitan region, the GVRD plus the Fraser Valley Regional District (FVRD), have a combined population of 2.8 million people, and lots of land (1,694,644 hectares of it). However, of this total, 1,476,430 (87.1 percent) is wetlands, glaciers, alpine, water, and forest and other non-human domination uses. The remaining 218,214 hectares is used for urban development (113,400 hectares), for agriculture 99,700 hectares, either distinctly or in a mixed agriculture and residential setting): and recreation and other rural uses (1024 hectares).

Drop a rectangle on a map of the region from Horseshoe Bay to Hope and down to the border, a box that has the dimensions of 130 km by 40 km, and out of the 520,000 hectares it contains, only 218,214 hectares (42 percent) can realistically be considered urban land supply. Drop the same area of box around any of Canada’s other major metropolitan areas, and essentially all 520,000 hectares are in play. In every other metropolitan region in Canada, if you double the size of the rectangle, the area for metropolitan development doubles: in this region, no matter how much bigger you make it, it will not significantly change the amount of land we have for metropolitan uses.

Of the 218,214 hectares of potential urban land, we have chosen to preserve the 99,700 hectares for agricultural use, reducing potential urban land to the 113,400 hectares already in urban uses. This means we have 22 percent of the urban land supply of Calgary, for example, and twice its population. It is no surprise that, all other things equal (such as incomes), our housing prices are much higher than theirs and our residential density is much greater. Sobering, and something that should inform every discussion about housing densities and prices, is the fact that at some point in time not to far away the historical options of growing “up or out” will no longer prevail – it will be up and redevelop.

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Report 2 Summary

Prices Crises: Cost and Benefits of Reducing Housing Prices, April 2016

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There has been a growing chorus of cries for governments to “do something to bring down housing prices to help with housing affordability” in metropolitan Vancouver.  I find the calls for such significant intervention worrisome, as no one has yet said how much which prices will be brought down, or who will bear the burden and who will get the benefit that would result from this intervention. Without such a social and economic cost benefit analysis, intelligent and effective policy cannot be discussed, selected and implemented.

As a starting point to the discussion, this report provides a set of empirical estimates of the major parameters of the costs and benefits of an arbitrary reduction in home prices in this region. If governments pushed prices down from the 2015 metropolitan real estate boards’ average of $779,577 (reflective of current assessed values) to the 2012 average of $646,415, the impact of this 19 percent reduction would be an average loss of $153,000 per home owner. Currently there are an estimated 656,966 homeowners in the region, 64 percent of the total households; the total cost to these owners from such a price reduction would be $100 billion.

There are an estimated 18,531 households in the region who would be homeowners if the highest historical levels of age specific ownership prevailed: if each of them could benefit by being able to purchase a home that was, on average, $153,000 lower than its current value, the benefit would be only $3 billion. The burden of the intervention would be 33 times greater than its benefit.

These values are what the math of price controls show in theory. In reality, they would not be effective, and would actually worsen the affordability problem. Price controls would not increase the supply of dwellings, they would not reduce the number of people competing for home ownership, and they would not change the relative purchasing power of those who would be owners if maximum age specific ownership rates prevailed. Shadow markets would develop that would bridge the distance between controlled prices and actual values, negating the price reductions in the property market by shifting the value difference to furnishings or art works. This would make markets less transparent and less accessible to those who did not have the financial resources to deal with the high levels of cash such markets involve.

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Report 1 Summary

Living Close: Concept and Consequence, March 2016

The slogan living close to work is a seductive siren’s call, enticing in its simplicity but not revealing the consequences of pursing it. One of the consequences of having everyone live close to work is that the population living in a community will have to be proportional to the employment in it. In the case of this region, it would mean that the City of Vancouver, which has 33 percent of the region’s employment, would have the same share of the region’s population, which would require a) 197,000 people moving in from other municipalities to bring its population share up to 33 percent from its current 25 percent, or b) 100,000 jobs moving out to these other communities to take its employment share down to 25 percent. If the City of Vancouver was home to all those who worked in it, its residential density would have to increase by 30 percent.

Higher density and higher housing prices are also consequences of living close to work for communities that have a more than proportional share of employment. The lower journey to work costs that living close to the employment centre attracts households who compete with each other to obtain these transportation savings; collectively they capitalize the transportation savings into higher land prices. Higher land prices and many people trying to live close to work mean higher densities – apartments close to work are for those whose priority is live close to work and detached housing with a commute to work are for those whose priority is housing.  If land use controls provide lower density housing in proximity to centers of employment, the prices of these homes will be relatively high as they offer a very rare opportunity. 

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